Correlation Between Chun Yuan and Yieh Phui

Can any of the company-specific risk be diversified away by investing in both Chun Yuan and Yieh Phui at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chun Yuan and Yieh Phui into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chun Yuan Steel and Yieh Phui Enterprise, you can compare the effects of market volatilities on Chun Yuan and Yieh Phui and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Chun Yuan with a short position of Yieh Phui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chun Yuan and Yieh Phui.

Diversification Opportunities for Chun Yuan and Yieh Phui

0.47

Correlation Coefficient

Chun Yuan  Yieh Phui

Very weak diversification

The 3 months correlation between Chun and Yieh is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Chun Yuan Steel and Yieh Phui Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yieh Phui Enterprise and Chun Yuan is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Chun Yuan Steel are associated (or correlated) with Yieh Phui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yieh Phui Enterprise has no effect on the direction of Chun Yuan i.e., Chun Yuan and Yieh Phui go up and down completely randomly.

Pair Corralation between Chun Yuan and Yieh Phui

Assuming the 90 days trading horizon Chun Yuan Steel is expected to under-perform the Yieh Phui. But the stock apears to be less risky and, when comparing its historical volatility, Chun Yuan Steel is 1.0 times less risky than Yieh Phui. The stock trades about -0.11 of its potential returns per unit of risk. The Yieh Phui Enterprise is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,520  in Yieh Phui Enterprise on October 20, 2024 and sell it today you would earn a total of  25.00  from holding Yieh Phui Enterprise or generate 1.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Chun Yuan Steel  vs.  Yieh Phui Enterprise

Chun Yuan Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chun Yuan Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Yieh Phui Enterprise

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yieh Phui Enterprise are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Yieh Phui is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chun Yuan and Yieh Phui

The main advantage of trading using opposite Chun Yuan and Yieh Phui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chun Yuan position performs unexpectedly, Yieh Phui can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Yieh Phui will offset losses from the drop in Yieh Phui's long position.

The idea behind Chun Yuan Steel and Yieh Phui Enterprise pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.